RI ESG Briefing, July 3: Swiss Re, Pensions Infrastructure Platform, AMF, Australasian Centre for Corporate Responsibility

The latest ESG developments


Swiss Re will no longer provide (re)insurance to businesses with more than 30% thermal coal exposure, across all lines of business. Having announced its reformed thermal coal policy in June last year, the insurer began implementing its reforms as of yesterday [July 2]. Swiss Re said the move is a “further step in refining Swiss Re’s approach to managing carbon-related sustainability risks and supporting the transition to a low-carbon economy”. The insurer had previously stopped investing in companies that generate 30% or more of their revenues from thermal coal mining or that use at least 30% thermal coal for power generation, and divested from existing holdings.

The Pensions Infrastructure Platform (PIP), which facilitates long-term investment in UK infrastructure, is partnering with Dalmore Capital on the purchase of a 49% stake in a 24-UK-wind-farm portfolio owned by EDF Renewables. PIP is making the investment on behalf of a local government authority pensions scheme, although it declined to identify the scheme involved. EDF Renewables will receive cash proceeds of £701m and retain 51% of equity.

AMF, a Swedish pension fund provider, has purchased the majority stake in Stena Renewable, one of the largest land-based wind energy companies with 94 plants and 244MW installed capacity. The transaction involved 35% of equity, valued at €750m, with a view of further investments up to €1bn in the coming years. The investments will be used to develop Stena Renewable into a large-scale industrial wind power company.

Swiss Re, La Banque Postale, and ICLEI – Local Governments for Sustainability are among the first signatories to the first-ever global insurance industry commitment to protecting World Heritage Sites. The statement – launched by the UN Environment’s Principles for Sustainable Insurance Initiative (PSI), WWF and the UNESCO World Heritage Centre – commits signatories to preventing or reducing the risk of insuring and investing in companies or projects whose activities could damage World Heritage Sites.

Triodos Bank has announced a £30m (€34m) loan to the University of Winchester in the first green finance deal in UK higher education. This is for the purposes of funding the construction of a BREEAM ‘outstanding’ rated sustainable building in the university which will increase teaching space by 20%. The building’s sustainability features include heat recovery systems and a green roof. Link


India’s fourth largest private sector bank YES BANK has launched what it says is the first-ever SDG-oriented deposit account. Intending to earmark equivalent proceeds raised through the “Green Future: Deposit” for sectors aligned with the SDGs, the bank aims to raise up to $150m (€130m). For every account opened, YES BANK will plant a tree in the depositor’s name, communicating the location of the plant via an “e-certificate”. The bank has confirmed the deposit product – which offers a 7.5% interest rate – is “the first of many green retail products that will be launched by YES BANK in this financial year”.

SOAS (London’s School of Oriental and African Studies) will introduce the UK’s first explicit “Green Finance” module during next year’s Spring Term. Students will learn “how climate and other environmental risks create potential financial risks in banking and capital markets” and “the role of financial actors in driving and potentially mitigating these risks”. The module will be taught by Professor Ulrich Volz, a prominent academic in the field, and will carry 15 credits.h6. Governance

The Australasian Centre for Corporate Responsibility has confirmed it will be rolling out several new projects this financial year. Its latest research report looks at gender pay equity and Australian-listed companies, identifying firms who are falling behind who it will be engaging with. The organisation’s next research focus will expand upon its previous work identifying different trade associations that actively lobby against initiatives relating to ESG issues such as climate change, plastics, and labour rights. Its forthcoming online “Vote Your Super” tool will provide information about Australian Super Funds and how they regard ESG issues.

Federated Investors, one of the largest investment managers in the US, has completed its acquisition of 60% of Hermes. BT Pension Scheme, the UK’s largest private-sector retirement fund and the owner of Hermes, received £246m ($324m) in the transaction. BTPS is to retain a 30%, and the remaining 10% of equity will be held by Hermes management. Hermes manages £33.6bn ($47.2bn) and advises on £331bn ($465bn) worth of assets.

A group of 47 investors representing $1.2trn in assets under management have warned investee companies to comply with conflict mineral reporting regulations. The statement issued by the Investor Alliance for Human Rights sought to clarify the status of reporting requirements, after recent developments introduced uncertainty with regards to enforcement. In 2017, the then Acting SEC chair, Michael Piwowar, sought to scale back a rule requiring manufacturers to disclose whether their products contained minerals from the war torn Democratic Republic of Congo. He said it was “difficult to conceive of a circumstance that would counsel in favor of enforcing” reporting requirements.

An early take on the SEC’s no-action process comes in Bloomberg Law’s special report Shareholder Proposals and the SEC: The Year So Far, especially interesting in light of the staff legal bulletin 14i which shook up the way that the SEC would be considering proposal exclusions. According to the report, the SEC responded to 217 shareholder proposal no-action letter requests in the first five months of 2018; a figure slightly lower than in 2017. Social issues were the most popular shareholder proposal topics this year, and also the object of the most exclusion requests, 58. However, only 29 were allowed to be excluded, 16 proposals had to be included, and 13 were withdrawn. In comparison, there were 42 no-action letters relating to environmental proposals, 19 were excluded, 10 included and 13 withdrawn.

The World Federation of Exchanges (WFE), the industry group for exchanges, has updated its guide to ESG reporting. The WFE’s ESG Guidance & Metrics is designed as a reference point for exchanges looking to introduce ESG reporting, and since its publication in 2015, over 35 exchanges have committed to issuing ESG reporting guidance. Notable revisions include adjustment of baseline metrics (33 to 30) based on the experience of implementation in certain markets and taking into account recent developments in sustainability including the SDGs and TCFD recommendations.

US companies face a “heightened, dangerous risk” to their reputations and brands when they spend money to influence elections in today’s “polarized political environment” according to campaign group the Center for Political Accountability. The Collision Course report spotlights the threat that unintended, damaging consequences can occur when a company’s political spending helps fuel a policy outcome that clashes with the company’s core values.